UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to _________
Commission file number 0-11002
CONSOLIDATED CAPITAL PROPERTIES IV
(Exact Name of Registrant as Specified in Its Charter)
California 94-2768742
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
March 31, December 31,
2003 2002
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 5,582 $ 2,127
Receivables and deposits 807 1,166
Restricted escrows 357 656
Due from affiliates -- 149
Other assets 1,374 1,449
Investment properties:
Land 9,732 10,907
Buildings and related personal property 119,763 126,750
129,495 137,657
Less accumulated depreciation (104,746) (110,917)
24,749 26,740
$ 32,869 $ 32,287
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 428 $ 407
Tenant security deposit liabilities 479 523
Accrued property taxes 690 1,392
Other liabilities 1,117 820
Distributions payable 571 571
Mortgage notes payable 68,177 72,630
71,462 76,343
Partners' Deficit
General partners (6,932) (7,146)
Limited partners (342,773 units issued and
outstanding) (31,661) (36,910)
(38,593) (44,056)
$ 32,869 $ 32,287
Note: The balance sheet at December 31, 2002, has been derived from the audited
financial statements at that date but does not include all the information
and footnotes required by accounting principles generally accepted in the
United States for complete financial statements.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended
March 31,
2003 2002
(Restated)
Revenues:
Rental income $ 4,889 $ 6,156
Other income 667 673
Total revenues 5,556 6,829
Expenses:
Operating 2,650 2,396
General and administrative 351 367
Depreciation 863 1,004
Interest 1,220 1,312
Property taxes 395 509
Total expenses 5,479 5,588
Income from continuing operations 77 1,241
Income from discontinued operations 33 187
Gain from sale of discontinued operations 6,149 --
Net income $ 6,259 $ 1,428
Net income allocated to general partners (4%) $ 250 $ 57
Net income allocated to limited partners (96%) 6,009 1,371
$ 6,259 $ 1,428
Per limited partnership unit:
Income from continuing operations $ 0.22 $ 3.48
Income from discontinued operations 0.09 0.52
Gain from sale of discontinued operations 17.22 --
Net income $ 17.53 $ 4.00
Distributions per limited partnership unit $ 2.22 $ --
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited Total
Partnership General Limited Partners'
Units Partners Partners Deficit
Original capital contributions 343,106 $ 1 $171,553 $171,554
Partners' deficit at
December 31, 2001 342,773 $ (7,064) $(35,636) $(42,700)
Distributions to partners -- (14) -- (14)
Net income for the three months
ended March 31, 2002 -- 57 1,371 1,428
Partners' deficit at
March 31, 2002 342,773 $ (7,021) $(34,265) $(41,286)
Partners' deficit at
December 31, 2002 342,773 $ (7,146) $(36,910) $(44,056)
Distributions to partners -- (36) (760) (796)
Net income for the three months
ended March 31, 2003 -- 250 6,009 6,259
Partners' deficit at
March 31, 2003 342,773 $ (6,932) $(31,661) $(38,593)
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2003 2002
Cash flows from operating activities:
Net income $ 6,259 $ 1,428
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 919 1,058
Amortization of loan costs 52 55
Casualty gain -- (97)
Loss on early extinguishment of debt 13 --
Gain on sale of discontinued operations (6,149) --
Change in accounts:
Receivables and deposits 359 251
Other assets 10 (494)
Accounts payable (79) 204
Tenant security deposit liabilities (44) (2)
Accrued property taxes (702) (567)
Other liabilities 297 311
Due from affiliates 149 --
Net cash provided by operating activities 1,084 2,147
Cash flows from investing activities:
Property improvements and replacements (816) (635)
Net withdrawals from restricted escrows 299 111
Insurance proceeds from casualties -- 145
Net proceeds from sale of discontinued operations 8,137 --
Net cash provided by (used in) investing activities 7,620 (379)
Cash flows from financing activities:
Payments on mortgage notes payable (224) (198)
Repayment of mortgage note payable (4,229) --
Distributions to partners (796) (14)
Net cash used in financing activities (5,249) (212)
Net increase in cash and cash equivalents 3,455 1,556
Cash and cash equivalents at beginning of period 2,127 2,729
Cash and cash equivalents at end of period $ 5,582 $ 4,285
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest was approximately $1,366,000 and $1,345,000 for the three
months ended March 31, 2003 and 2002, respectively.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated
Capital Properties IV (the "Partnership" or "Registrant") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of ConCap Equities, Inc. ("CEI" or the "General
Partner"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three months ended March 31, 2003, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 2003. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Partnership's Annual Report on Form 10-K for the fiscal
year ended December 31, 2002. The General Partner is a subsidiary of Apartment
Investment and Management Company ("AIMCO"), a publicly traded real estate
investment trust.
Effective January 1, 2002, the Partnership adopted Statement of Financial
Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", which established standards for the way that
business enterprises report information about long-lived assets that are either
being held for sale or have already been disposed of by sale or other means. The
standard requires that results of operations for a long-lived asset that is
being held for sale or has already been disposed of be reported as discontinued
operations on the statement of operations. As a result, the accompanying
consolidated statements of operations have been restated as of January 1, 2002
to reflect the operations and gain from sale of South Port Apartments, which was
sold March 28, 2003, as income from discontinued operations and gain on sale
from discontinued operations.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The Partnership Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursements of certain expenses incurred by affiliates on
behalf of the Partnership.
During the three months ended March 31, 2003 and 2002, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all the Partnership's
properties as compensation for providing property management services. The
Partnership paid to such affiliates approximately $295,000 and $372,000 for the
three months ended March 31, 2003 and 2002, respectively, which is included in
operating expenses. During the three months ended March 31, 2003, an affiliate
of the General Partner refunded the Partnership approximately $38,000 for
overpayment of property management fees during 2002.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $252,000 and $307,000 for the
three months ended March 31, 2003 and 2002, respectively, which is included in
general and administrative expenses and investment properties. Included in these
amounts are fees related to construction management services provided by an
affiliate of the General Partner of approximately $27,000 and $19,000 for the
three months ended March 31, 2003 and 2002, respectively. The construction
management service fees are calculated based on a percentage of current year
additions to investment properties. During the three months ended March 31,
2003, an affiliate of the General Partner refunded the Partnership approximately
$111,000 for overpayment of management reimbursements during 2002.
The Partnership Agreement provides for a special management fee equal to 9% of
the total distributions made to the limited partners from cash flow provided by
operations to be paid to the General Partner for executive and administrative
management services. The Partnership paid approximately $68,000 under this
provision of the Partnership Agreement to the General Partner during the three
months ended March 31, 2003, which is included in general and administrative
expenses. There were no such special management fees paid or earned during the
three months ended March 31, 2002.
For acting as real estate broker in connection with the sale of South Port
Apartments, the General Partner was paid a real estate commission of
approximately $295,000 during the three months ended March 31, 2003. When the
Partnership terminates, the General Partner will have to return this commission
if the limited partners do not receive their original invested capital plus a 6%
per annum cumulative return.
The Partnership insures its properties up to certain limits through coverage
provided by AIMCO which is generally self-insured for a portion of losses and
liabilities related to workers compensation, property casualty and vehicle
liability. The Partnership insures its properties above the AIMCO limits through
insurance policies obtained by AIMCO from insurers unaffiliated with the General
Partner. During 2003 and 2002, the Partnership's cost for insurance coverage and
fees associated with policy claims administration provided by AIMCO and its
affiliates will be approximately $350,000 and $423,000.
Note C - Casualty Gain
In March 2000, South Port Apartments had wind and hail damage, which damaged the
majority of the 240 rental units. The repairs included roof replacements to the
majority of units. Insurance proceeds of approximately $145,000 were received
during the three months ended March 31, 2002. The Partnership recognized a
casualty gain of approximately $97,000 during the three months ended March 31,
2002, which represents the excess of the proceeds received as of March 31, 2002
over the write-off of the undepreciated damaged assets, and is included in
income from discontinued operations in the accompanying consolidated statements
of operations.
Note D - Disposition of Investment Property
On March 28, 2003, the Partnership sold South Port Apartments to an unrelated
third party, for a gross sale price of $8,625,000. The net proceeds realized by
the Partnership were approximately $8,137,000 after payment of closing costs of
approximately $488,000. The Partnership used approximately $4,229,000 of the net
proceeds to repay the mortgage encumbering the property. The Partnership
realized a gain of approximately $6,149,000 for the three months ended March 31,
2003, as a result of this sale, this amount is included in gain on sale of
discontinued operations in the accompanying consolidated statements of
operations. The property's operations, income of approximately $33,000 and
$187,000 for the three months ended March 31, 2003 and 2002, respectively,
including revenues of approximately $340,000 and $489,000, respectively, are
included in income from discontinued operations. In addition, the Partnership
recorded a loss on early extinguishment of debt of approximately $13,000 for the
three months ended March 31, 2003 due to the write-off of unamortized loan
costs, which is also included in income from discontinued operations in the
accompanying consolidated statements of operations.
Note E - Subsequent Distribution
Subsequent to the three months ended March 31, 2003, the Partnership paid a
distribution from the sales proceeds of South Port Apartments to the limited
partners of approximately $3,599,000.
Note F - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purports to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) which are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs seek monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the General Partner filed a
motion seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs filed an amended complaint. The General Partner filed demurrers to
the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the General Partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement. On June 27, 2000, the Court entered an order disqualifying them
from the case and an appeal was taken from the order on October 5, 2000. On
December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann &
Bernstein LLP as new lead counsel for plaintiffs and the putative class.
Plaintiffs filed a third amended complaint on January 19, 2001. On March 2,
2001, the General Partner and its affiliates filed a demurrer to the third
amended complaint. On May 14, 2001, the Court heard the demurrer to the third
amended complaint. On July 10, 2001, the Court issued an order sustaining
defendants' demurrer on certain grounds. On July 20, 2001, Plaintiffs filed a
motion for reconsideration of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed
a fourth amended class and derivative action complaint. On September 12, 2001,
the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint, which was heard on December 11, 2001. On February 2, 2002, the Court
served its order granting in part the demurrer. The Court has dismissed without
leave to amend certain of the plaintiffs' claims. On February 11, 2002,
plaintiffs filed a motion seeking to certify a putative class comprised of all
non-affiliated persons who own or have owned units in the partnerships. The
General Partner and affiliated defendants oppose the motion. On April 29, 2002,
the Court held a hearing on plaintiffs' motion for class certification and took
the matter under submission after further briefing, as ordered by the court, was
submitted by the parties. On July 10, 2002, the Court entered an order vacating
the trial date of January 13, 2003 (as well as the pre-trial and discovery
cut-off dates) and stayed the case in its entirety through November 7, 2002 so
that the parties could have an opportunity to discuss settlement. On October 30,
2002, the court entered an order extending the stay in effect through January
10, 2003.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action described below. On April
4, 2003, the Court preliminarily approved the settlement and scheduled a hearing
on final approval for June 2, 2003.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the "Partnerships") as of December 20, 2002, the
dismissal with prejudice and release of claims in the Nuanes and Heller
litigation, payment by AIMCO of $9.9 million (which shall be distributed to
settlement class members after deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent appraisals of the Partnerships' properties by a Court appointed
appraiser. An affiliate of the General Partner has also agreed to make a tender
offer to purchase all of the partnership interests in the Partnerships within
one year of final approval, if it is granted, and to provide partners with the
independent appraisals at the time of these tenders. The proposed settlement
also provides for the limitation of the allowable costs which the General
Partner or its affiliates will charge the Partnerships in connection with this
litigation and imposes limits on the class counsel fees and costs in this
litigation. On April 11, 2003, notice was distributed to limited partners
providing the details of the proposed settlement.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first amended complaint in its entirety for violating the
Court's July 10, 2001 order granting in part and denying in part defendants'
demurrer in the Nuanes action, or alternatively, to strike certain portions of
the complaint based on the statute of limitations. Other defendants in the
action demurred to the fourth amended complaint, and, alternatively, moved to
strike the complaint. On December 11, 2001, the court heard argument on the
motions and took the matters under submission. On February 4, 2002, the Court
served notice of its order granting defendants' motion to strike the Heller
complaint as a violation of its July 10, 2001 order in the Nuanes action. On
March 27, 2002, the plaintiffs filed a notice appealing the order striking the
complaint. Before completing briefing on the appeal, the parties stayed further
proceedings in the appeal pending the Court's review of the terms of the
proposed settlement described above.
The General Partner does not anticipate that any costs to the Partnership,
whether legal or settlement costs, associated with these cases will be material
to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government regulations. The discussions of the Registrant's
business and results of operations, including forward-looking statements
pertaining to such matters, do not take into account the effects of any changes
to the Registrant's business and results of operations. Actual results may
differ materially from those described in the forward-looking statements and
will be affected by a variety of risks and factors including, without
limitation: national and local economic conditions; the terms of governmental
regulations that affect the Registrant and interpretations of those regulations;
the competitive environment in which the Registrant operates; financing risks,
including the risk that cash flows from operations may be insufficient to meet
required payments of principal and interest; real estate risks, including
variations of real estate values and the general economic climate in local
markets and competition for tenants in such markets; and possible environmental
liabilities. Readers should carefully review the Registrant's financial
statements and the notes thereto, as well as the risk factors described in the
documents the Registrant files from time to time with the Securities and
Exchange Commission.
The Partnership's investment properties consist of fourteen apartment complexes.
The following table sets forth the average occupancy of the properties for the
three months ended March 31, 2003 and 2002:
Average Occupancy
Property 2003 2002
The Apartments 91% 89%
Omaha, NE
Arbours of Hermitage Apartments 94% 91%
Nashville, TN
Briar Bay Racquet Club Apartments 90% 95%
Miami, FL
Chimney Hill Apartments 6% 89%
Marietta, GA
Citadel Apartments 92% 94%
El Paso, TX
Citadel Village Apartments 61% 93%
Colorado Springs, CO
Foothill Place Apartments 83% 94%
Salt Lake City, UT
Knollwood Apartments 96% 93%
Nashville, TN
Lake Forest Apartments 94% 93%
Omaha, NE
Nob Hill Villa Apartments 88% 90%
Nashville, TN
Point West Apartments 90% 93%
Charleston, SC
Post Ridge Apartments 96% 90%
Nashville, TN
Rivers Edge Apartments 92% 94%
Auburn, WA
Village East Apartments 67% 83%
Cimarron Hills, CO
The increase in occupancy at Arbours of Hermitage Apartments, Knollwood
Apartments and Post Ridge Apartments is attributable to a more aggressive
marketing campaign. The decrease in occupancy at Briar Bay Racquet Club
Apartments, Point West Apartments and Foothill Place Apartments is due to more
tenants purchasing houses due to lower mortgage interest rates and changing
economic conditions in their respective local markets. The decrease in occupancy
at Village East Apartments and Citadel Village Apartments is due to an increase
in competitive pricing strategies and competition in their respective local
markets. The Partnership attributes the decrease in occupancy at Chimney Hill
Apartments primarily to the presence of mold in a significant number of the
units and general deferred maintenance issues has resulted in all apartment
units not being available for rent as of March 31, 2003. The General Partner is
currently evaluating its options with respect to Chimney Hill Apartments,
including rehabilitation or complete rebuild of the property.
Results of Operations
The Partnership's net income for the three months ended March 31, 2003 was
approximately $6,259,000, as compared to net income of approximately $1,428,000
for the three months ended March 31, 2002. The increase is due to the
recognition of a gain from sale of discontinued operations in 2003, partially
offset by a decrease in income from continuing operations. On March 28, 2003,
the Partnership sold South Port Apartments to an unrelated third party, for a
gross sale price of $8,625,000. The net proceeds realized by the Partnership
were approximately $8,137,000 after payment of closing cost of approximately
$488,000. The Partnership used approximately $4,229,000 of the net proceeds to
repay the mortgage encumbering the property. The Partnership realized a gain of
approximately $6,149,000 for the three months ended March 31, 2003, as a result
of this sale. This amount is included in gain on sale of discontinued operations
in the accompanying consolidated statements of operations. The property's
operations, income of approximately $33,000 and $187,000 for the three months
ended March 31, 2003 and 2002, respectively, including revenues of approximately
$340,000 and $489,000, respectively, are included in income from discontinued
operations.
The Partnership also recorded a loss on early extinguishment of debt of
approximately $13,000 for the three months ended March 31, 2003 due to the
write-off of unamortized loan costs, which is also included in income from
discontinued operations in the accompanying consolidated statements of
operations.
In March 2000, South Port Apartments had wind and hail damage, which damaged the
majority of the 240 rental units. The repairs included roof replacements to the
majority of units. Insurance proceeds of approximately $145,000 were received
during the three months ended March 31, 2002. The Partnership recognized a
casualty gain of approximately $97,000 during the three months ended March 31,
2002, which represents the excess of the proceeds received as of March 31, 2002
over the write-off of the undepreciated damaged assets and is included in income
from discontinued operations.
Excluding the impact of income from discontinued operations and the gain on sale
of discontinued operations, the Partnership's income from continuing operations
for the three months ended March 31, 2003 was approximately $77,000, as compared
to income from continuing operations of approximately $1,241,000 for the three
months ended March 31, 2002. The decrease in income from continuing operations
is due to a decrease in total revenues partially offset by a decrease in total
expenses. The decrease in total revenues is due to a decrease in rental income.
Rental income decreased due to a decrease in occupancy at nine of the fourteen
investment properties and an increase in bad debt expense at nine investment
properties, partially offset by an increase in occupancy at three of the
investment properties.
Total expenses decreased due to a decrease in depreciation, interest and
property tax expenses, partially offset by an increase in operating expense.
Depreciation decreased due to some fixed assets becoming fully depreciated at
The Apartments and Lake Forest Apartments during 2002 partially offset by an
increase in capital improvements completed and placed into service during the
past twelve months. Interest expense decreased due to capitalization of
approximately $98,000 of interest expense at Chimney Hill Apartments related to
the renovation project during 2003. Property tax expense decreased due to
capitalization of taxes at Chimney Hill Apartments related to the renovation
project during 2003 and a refund received at Citadel Apartments for prior year
taxes during the three months ended March 31, 2003.
The increase in operating expense was due to an increase in maintenance,
advertising and insurance expense, partially offset by a decrease in property
management fees. Maintenance expense increased due to an increase in contract
work at many of the Partnership's investment properties. Advertising expense
increased due to an increase in resident relations at Chimney Hill Apartments
and periodical and web advertising at many of the Partnership's investment
properties. Insurance expense increased due to an increase in hazard insurance
premiums at many of the Partnership's investment properties. Property management
fees are based on a percentage of revenues and decreased as a result of
decreases in rental income at many of the investment properties.
General and administrative expenses consist of management reimbursements to the
General Partner as allowed under the Partnership Agreement and management fees
paid to the General Partner in connection with distributions made from
operations. Also included are costs associated with the quarterly communications
with investors and regulatory agencies and the annual audit required by the
Partnership Agreement.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At March 31, 2003, the Partnership held cash and cash equivalents of
approximately $5,582,000 as compared to approximately $4,285,000 at March 31,
2002. The increase in cash and cash equivalents of approximately $3,455,000 from
the Partnership's year ended December 31, 2002, is due to approximately
$7,620,000 of cash provided by investing activities and approximately $1,084,000
of cash provided by operating activities, partially offset by approximately
$5,249,000 of cash used in financing activities. Cash provided by investing
activities consisted of net proceeds received from the sale of discontinued
operations and net withdrawals from escrow accounts maintained by the mortgage
lenders, partially offset by property improvements and replacements. Cash used
in financing activities consisted of payments of principal made on the mortgages
encumbering the Registrant's properties, repayment of the mortgage encumbering
South Port Apartments and distributions to the partners. The Partnership invests
its working capital reserves in interest bearing accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and other operating needs of the Partnership and to comply with Federal,
state, and local legal and regulatory requirements. The General Partner monitors
developments in the area of legal and regulatory compliance and is studying new
federal laws, including the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act
of 2002 mandates or suggests additional compliance measures with regard to
governance, disclosure, audit and other areas. In light of these changes, the
Partnership expects that it will incur higher expenses related to compliance,
including increased legal and audit fees. Capital improvements planned for each
of the Partnership's properties are detailed below.
The Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $11,000 of capital improvements at The Apartments, consisting
primarily of floor covering replacements and maintenance equipment. These
improvements were funded from operating cash flow. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $98,000 in capital improvements during the remainder
of 2003. The additional capital improvements will consist primarily of garage
doors, floor covering and appliance replacements. Additional capital
improvements may be considered and will depend on the physical condition of the
property as well as the anticipated cash flow generated by the property.
Arbours of Hermitage Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $31,000 of capital improvements at Arbours of Hermitage
Apartments, consisting primarily of structural improvements and floor covering
and appliance replacements. These improvements were funded from operating cash
flow. The Partnership evaluates the capital improvement needs of the property
during the year and currently expects to complete an additional $158,000 in
capital improvements during the remainder of 2003. The additional capital
improvements will consist primarily of structural upgrades, floor covering and
appliance replacements. Additional capital improvements may be considered and
will depend on the physical condition of the property as well as the anticipated
cash flow generated by the property.
Briar Bay Club Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $31,000 of capital improvements at Briar Bay Racquet Club
Apartments, consisting primarily of appliance and floor covering replacements,
roof and structural upgrades and major landscaping. These improvements were
funded from operating cash flow. The Partnership evaluates the capital
improvement needs of the property during the year and currently expects to
complete an additional $514,000 in capital improvements during the remainder of
2003. The additional capital improvements will consist primarily of major
landscaping, structural, plumbing and parking lot upgrades and appliance and
floor covering replacements. Additional capital improvements may be considered
and will depend on the physical condition of the property as well as replacement
reserves and the anticipated cash flow generated by the property.
Chimney Hill Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $387,000 of capital improvements at Chimney Hill Apartments,
consisting primarily of parking lot resurfacing, water heater replacements, mold
removal and roof and structural upgrades. These expenditures included
capitalized construction period interest of approximately $98,000, taxes and
insurance of approximately $64,000 and other construction period operating
expenses of approximately $112,000. These improvements were funded from
operating cash flow and partnership reserves. The Partnership is currently
evaluating its options for the property, including rehabilitation or complete
rebuild of the property.
Citadel Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $27,000 of capital improvements at Citadel Apartments, consisting
primarily of water heaters, floor covering replacements, and plumbing fixtures.
These improvements were funded from operating cash flow. The Partnership
evaluates the capital improvement needs of the property during the year and
currently expects to complete an additional $91,000 in capital improvements
during the remainder of 2003. The additional capital improvements will consist
primarily of structural upgrades and appliance and floor covering replacements.
Additional capital improvements may be considered and will depend on the
physical condition of the property as well as the anticipated cash flow
generated by the property.
Citadel Village Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $27,000 of capital improvements at Citadel Village Apartments,
consisting primarily of appliance and floor covering replacements and structural
upgrades. These improvements were funded from operating cash flow. The
Partnership evaluates the capital improvement needs of the property during the
year and currently expects to complete an additional $85,000 in capital
improvements during the remainder of 2003. The additional capital improvements
will consist primarily of cabinet replacements, interior building improvements
and appliance and floor covering replacements. Additional capital improvements
may be considered and will depend on the physical condition of the property as
well as the anticipated cash flow generated by the property.
Foothill Place Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $105,000 of capital improvements at Foothill Place Apartments,
consisting primarily of water heaters, plumbing fixtures, appliance and floor
covering replacements and structural upgrades. These improvements were funded
from operating cash flow. The Partnership evaluates the capital improvement
needs of the property during the year and currently expects to complete an
additional $665,000 in capital improvements during the remainder of 2003. The
additional capital improvements will consist primarily of major landscaping,
plumbing improvements, structural and electrical and floor covering and
appliance replacements. Additional capital improvements may be considered and
will depend on the physical condition of the property as well as the anticipated
cash flow generated by the property.
Knollwood Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $39,000 of capital improvements at Knollwood Apartments,
consisting primarily of floor covering replacements and roof and structural
upgrades. These improvements were funded from operating cash flow. The
Partnership evaluates the capital improvement needs of the property during the
year and currently expects to complete an additional $29,000 in capital
improvements during the remainder of 2003. The additional capital improvements
will consist primarily of floor covering, appliance and cabinet replacements.
Additional capital improvements may be considered and will depend on the
physical condition of the property as well as the anticipated cash flow
generated by the property.
Lake Forest Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $19,000 of capital improvements at Lake Forest Apartments,
consisting primarily of fire safety upgrades and floor covering and appliance
replacements. These improvements were funded from operating cash flow and
replacement reserves. The Partnership evaluates the capital improvement needs of
the property during the year and currently expects to complete an additional
$97,000 in capital improvements during the remainder of 2003. The additional
capital improvements will consist primarily of structural upgrades, water heater
replacements, appliance and floor covering replacements and major landscaping.
Additional capital improvements may be considered and will depend on the
physical condition of the property as well as the anticipated cash flow
generated by the property and replacement reserves.
Nob Hill Villa Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $41,000 of capital improvements at Nob Hill Villa Apartments,
consisting primarily of appliance and floor covering replacements, electrical
upgrades, water heaters replacements and plumbing fixtures. These improvements
were funded from operating cash flow and replacement reserves. The Partnership
evaluates the capital improvement needs of the property during the year and
currently expects to complete an additional $469,000 in capital improvements
during the remainder of 2003. The additional capital improvements will consist
primarily of roof replacement, interior building improvements, floor covering,
cabinet and HVAC replacements. Additional capital improvements may be considered
and will depend on the physical condition of the property as well as the
anticipated cash flow generated by the property and replacement reserves.
Point West Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $14,000 of capital improvements at Point West Apartments,
consisting primarily of floor covering replacements. These improvements were
funded from operating cash flow. The Partnership evaluates the capital
improvement needs of the property during the year and currently expects to
complete an additional $55,000 in capital improvements during the remainder of
2003. The additional capital improvements will consist primarily of window
replacements, cabinet upgrades and floor covering and appliance replacements.
Additional capital improvements may be considered and will depend on the
physical condition of the property as well as the anticipated cash flow
generated by the property.
Post Ridge Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $16,000 of capital improvements at Post Ridge Apartments,
consisting primarily of floor covering replacements and plumbing fixtures. These
improvements were funded from operating cash flow. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $20,000 in capital improvements during the remainder
of 2003. The additional capital improvements will consist primarily of roof
repairs, floor covering, HVAC and appliance replacements. Additional capital
improvements may be considered and will depend on the physical condition of the
property as well as the anticipated cash flow generated by the property.
Rivers Edge Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $14,000 of capital improvements at Rivers Edge Apartments,
consisting primarily of floor covering replacements. These improvements were
funded from operating cash flow. The Partnership evaluates the capital
improvement needs of the property during the year and currently expects to
complete an additional $28,000 in capital improvements during the remainder of
2003. The additional capital improvements will consist primarily of structural
upgrades and floor covering and appliance replacements. Additional capital
improvements may be considered and will depend on the physical condition of the
property as well as the anticipated cash flow generated by the property.
South Port Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $21,000 of capital improvements at South Port Apartments,
consisting primarily of floor covering and appliance replacements. These
improvements were funded from operating cash flow. The property was sold on
March 28, 2003.
Village East Apartments
During the three months ended March 31, 2003, the Partnership completed
approximately $33,000 of capital improvements at Village East Apartments,
consisting primarily of floor covering replacements and exterior painting. These
improvements were funded from operating cash flow. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $172,000 in capital improvements during the remainder
of 2003. The additional capital improvements will consist primarily of major
landscaping, structural and plumbing upgrades, appliance and floor covering
replacements and exterior painting. Additional capital improvements may be
considered and will depend on the physical condition of the property as well as
the anticipated cash flow generated by the property.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
The Partnership's assets are currently thought to be sufficient for any
near-term needs (exclusive of capital improvements) of the Partnership. The
mortgage indebtedness of approximately $68,177,000 matures at various dates
between 2004 and 2022. The General Partner will attempt to refinance such
indebtedness and/or sell the properties prior to such maturity dates. If the
properties cannot be refinanced or sold for a sufficient amount, the Partnership
will risk losing such properties through foreclosure.
Pursuant to the Partnership Agreement, the term of the Partnership is scheduled
to expire on December 31, 2011. Accordingly, prior to such date the Partnership
will need to either sell its investment properties or extend the term of the
Partnership.
The Partnership distributed the following amounts during the three months ended
March 31, 2003 and 2002 (in thousands except per unit data):
Three Months Per Three Months Per
Ended Limited Ended Limited
March 31, Partnership March 31, Partnership
2003 Unit 2002 Unit
Operations $ 792 $ 2.22 $ -- $ --
In conjunction with the transfer of funds from their certain majority-owned
sub-tier limited partnerships to the Partnership, approximately $4,000 and
$14,000 was distributed to the general partner of the majority owned sub-tier
limited partnerships during the three months ended March 31, 2003 and 2002,
respectively.
Subsequent to March 31, 2003, the Partnership paid a distribution from the sale
proceeds of South Port Apartments to the limited partners of approximately
$3,599,000.
The Partnership's cash available for distribution is reviewed on a monthly
basis. Future cash distributions will depend on the levels of net cash generated
from operations, the availability of cash reserves, and the timing of debt
maturities, refinancings and/or property sales. There can be no assurance,
however, that the Partnership will generate sufficient funds from operations,
after planned capital improvement expenditures, to permit distributions to its
partners during the remainder of 2003 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 193,552.50 limited partnership units
in the Partnership representing 56.47% of the outstanding units at March 31,
2003. A number of these units were acquired pursuant to tender offers made by
AIMCO or its affiliates. It is possible that AIMCO or its affiliates will
acquire additional units of limited partnership interest in the Partnership in
exchange for cash or a combination of cash and units in the operating
partnership of AIMCO either through private purchases or tender offers. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters, which would
include voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. As a result of its ownership of 56.47% of the
outstanding units, AIMCO is in a position to control all such voting decisions
with respect to the Partnership. Although the General Partner owes fiduciary
duties to the limited partners of the Partnership, the General Partner also owes
fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of
the General Partner, as general partner, to the Partnership and its limited
partners may come into conflict with the duties of the General Partner to AIMCO,
as its sole stockholder.
Critical Accounting Policies and Estimates
The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States which require the Partnership
to make estimates and assumptions. The Partnership believes that of its
significant accounting policies, the following may involve a higher degree of
judgment and complexity.
Impairment of Long-Lived Assets
Investment properties are recorded at cost, less accumulated depreciation,
unless considered impaired. If events or circumstances indicate that the
carrying amount of a property may be impaired, the Partnership will make an
assessment of its recoverability by estimating the undiscounted future cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include changes in the
national, regional and local economic climate; local conditions, such as an
oversupply of multifamily properties; competition from other available
multifamily property owners and changes in market rental rates. Any adverse
changes in these factors could cause an impairment in the Partnership's assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
Rental income attributable to leases is recognized monthly as it is earned and
the Partnership fully reserves all balances outstanding over thirty days. The
Partnership will offer rental concessions during particularly slow months or in
response to heavy competition from other similar complexes in the area.
Concessions are charged to income as incurred.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Partnership is exposed to market risks from adverse changes in interest
rates. In this regard, changes in U.S. interest rates affect the interest earned
on the Partnership's cash and cash equivalents as well as interest paid on its
indebtedness. As a policy, the Partnership does not engage in speculative or
leveraged transactions, nor does it hold or issue financial instruments for
trading purposes. The Partnership is exposed to changes in interest rates
primarily as a result of its borrowing activities used to maintain liquidity and
fund business operations. To mitigate the impact of fluctuations in U.S.
interest rates, the Partnership maintains its debt as fixed rate in nature by
borrowing on a long-term basis. Based on interest rates at March 31, 2003, a 100
basis point increase or decrease in market interest rates would not have a
material impact on the Partnership.
The following table summarizes the Partnership's debt obligations at March 31,
2003. The interest rates represent the weighted-average rates. The fair value of
the debt obligations approximated the recorded value as of March 31, 2003.
Principal amount by expected maturity:
Long Term Debt
Fixed Rate Debt Average Interest Rate
(in thousands)
2003 $ 651 7.89%
2004 931 7.89%
2005 43,138 7.42%
2006 875 7.68%
2007 944 7.68%
Thereafter 21,638 7.68%
Total $68,177
ITEM 4. CONTROLS AND PROCEDURES
The principal executive officer and principal financial officer of the General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal financial officer, respectively, have, within 90 days of the
filing date of this quarterly report, evaluated the effectiveness of the
Partnership's disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14(c) and 15d-14(c)) and have determined that such disclosure controls
and procedures are adequate. There have been no significant changes in the
Partnership's internal controls or in other factors that could significantly
affect the Partnership's internal controls since the date of evaluation. The
Partnership does not believe any significant deficiencies or material weaknesses
exist in the Partnership's internal controls. Accordingly, no corrective actions
have been taken.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purports to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) which are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs seek monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the General Partner filed a
motion seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs filed an amended complaint. The General Partner filed demurrers to
the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the General Partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement. On June 27, 2000, the Court entered an order disqualifying them
from the case and an appeal was taken from the order on October 5, 2000. On
December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann &
Bernstein LLP as new lead counsel for plaintiffs and the putative class.
Plaintiffs filed a third amended complaint on January 19, 2001. On March 2,
2001, the General Partner and its affiliates filed a demurrer to the third
amended complaint. On May 14, 2001, the Court heard the demurrer to the third
amended complaint. On July 10, 2001, the Court issued an order sustaining
defendants' demurrer on certain grounds. On July 20, 2001, Plaintiffs filed a
motion for reconsideration of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed
a fourth amended class and derivative action complaint. On September 12, 2001,
the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint, which was heard on December 11, 2001. On February 2, 2002, the Court
served its order granting in part the demurrer. The Court has dismissed without
leave to amend certain of the plaintiffs' claims. On February 11, 2002,
plaintiffs filed a motion seeking to certify a putative class comprised of all
non-affiliated persons who own or have owned units in the partnerships. The
General Partner and affiliated defendants oppose the motion. On April 29, 2002,
the Court held a hearing on plaintiffs' motion for class certification and took
the matter under submission after further briefing, as ordered by the court, was
submitted by the parties. On July 10, 2002, the Court entered an order vacating
the trial date of January 13, 2003 (as well as the pre-trial and discovery
cut-off dates) and stayed the case in its entirety through November 7, 2002 so
that the parties could have an opportunity to discuss settlement. On October 30,
2002, the court entered an order extending the stay in effect through January
10, 2003.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action described below. On April
4, 2003, the Court preliminarily approved the settlement and scheduled a hearing
on final approval for June 2, 2003.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the "Partnerships") as of December 20, 2002, the
dismissal with prejudice and release of claims in the Nuanes and Heller
litigation, payment by AIMCO of $9.9 million (which shall be distributed to
settlement class members after deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent appraisals of the Partnerships' properties by a Court appointed
appraiser. An affiliate of the General Partner has also agreed to make a tender
offer to purchase all of the partnership interests in the Partnerships within
one year of final approval, if it is granted, and to provide partners with the
independent appraisals at the time of these tenders. The proposed settlement
also provides for the limitation of the allowable costs which the General
Partner or its affiliates will charge the Partnerships in connection with this
litigation and imposes limits on the class counsel fees and costs in this
litigation. On April 11, 2003, notice was distributed to limited partners
providing the details of the proposed settlement.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first amended complaint in its entirety for violating the
Court's July 10, 2001 order granting in part and denying in part defendants'
demurrer in the Nuanes action, or alternatively, to strike certain portions of
the complaint based on the statute of limitations. Other defendants in the
action demurred to the fourth amended complaint, and, alternatively, moved to
strike the complaint. On December 11, 2001, the court heard argument on the
motions and took the matters under submission. On February 4, 2002, the Court
served notice of its order granting defendants' motion to strike the Heller
complaint as a violation of its July 10, 2001 order in the Nuanes action. On
March 27, 2002, the plaintiffs filed a notice appealing the order striking the
complaint. Before completing briefing on the appeal, the parties stayed further
proceedings in the appeal pending the Court's review of the terms of the
proposed settlement described above.
The General Partner does not anticipate that any costs to the Partnership,
whether legal or settlement costs, associated with these cases will be material
to the Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
3.1 Certificate of Limited Partnership, (incorporated by
reference to the Registration statement of the
Partnership (file No. 2-74353), filed October 9, 1981,
as amended to date).
3.2 Limited Partnership Agreement (Exhibit to the Prospectus
of the Partnership, filed October 12, 1981).
99 Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
b) Reports on Form 8-K:
None filed during the quarter ended March 31, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONSOLIDATED CAPITAL PROPERTIES IV
By: CONCAP EQUITIES, INC.
General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Thomas C. Novosel
Thomas C. Novosel
Senior Vice President and
Chief Accounting Officer
Date: May 15, 2003
CERTIFICATION
I, Patrick J. Foye, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital
Properties IV;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/Patrick J. Foye
Patrick J. Foye
Executive Vice President of ConCap Equities, Inc.,
equivalent of the chief executive officer of the
Partnership
CERTIFICATION
I, Paul J. McAuliffe, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital
Properties IV;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: May 15, 2003
/s/Paul J. McAuliffe
Paul J. McAuliffe
Executive Vice President and Chief Financial Officer of
ConCap Equities, Inc., equivalent of the chief
financial officer of the Partnership
Exhibit 99
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Consolidated Capital
Properties IV (the "Partnership"), for the quarterly period ended March 31, 2003
as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), Patrick J. Foye, as the equivalent of the chief executive officer of
the Partnership, and Paul J. McAuliffe, as the equivalent of the chief financial
officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Partnership.
/s/Patrick J. Foye
Name: Patrick J. Foye
Date: May 15, 2003
/s/Paul J. McAuliffe
Name: Paul J. McAuliffe
Date: May 15, 2003
This certification accompanies the Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by the Partnership for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.